Gold and Silver Prices Dip on Corrective Pullbacks and Profit-Taking
Gold and silver prices are weaker again in early U.S. trading Wednesday, on routine corrective pullbacks and some profit-taking following recent solid gains that saw gold hit a record high of $2,454.20 an ounce, basis June Comex futures on Monday, and silver hit an 11-year high of $32.75 an ounce, basis July Comex futures. Bearish daily “outside market” forces are also squelching the precious metals market bulls at mid-week. The U.S. dollar index is higher and crude oil prices are lower. Meantime, U.S. Treasury yields have up-ticked today. June gold was last down $11.20 at $2,414.80. July silver was last down $0.263 at $31.815.
Part of the reason for gold’s rally the past several months has been central banks, specifically China, diversifying away from U.S. dollar-based assets that can be more easily sanctioned. The Journal report refers to the U.S. economic sanctions on Russia as a wake-up call for other countries like China to seek assets like gold, which are more “sanctions-proof.”
Global Economic Trends Impacting Metals Market
Asian and European stock indexes were mixed to weaker overnight, and U.S. stock indexes are pointed toward weaker openings. Despite near-record highs in U.S. stock indexes, concerns are arising as the CBOE’s VIX index shows low implied volatility, signaling potential trouble ahead. Low VIX levels historically precede market corrections.
Another significant development is China’s increasing control over crucial minerals like nickel, lithium, and cobalt, essential for defense and green technology. This move highlights China’s dominance in critical resources, posing challenges for Western countries trying to keep up.
Key Market Indicators and Economic Data
The key outside markets today see the U.S. dollar index higher, Nymex crude oil prices down, and the yield on the 10-year U.S. Treasury note at 4.457%. Economic data to watch includes the FOMC meeting minutes, the weekly MBA mortgage applications survey, existing home sales, and the weekly DOE liquid energy stocks report.
Technical Analysis of Gold and Silver Futures
Technically, gold futures bulls maintain a solid near-term advantage, with resistance at $2,500. Strong support is seen at $2,350. Silver bulls also have an advantage, with an uptrend continuing on the daily chart. Resistance is at $35.00, while support rests at $30.00.
(Hey! My “Markets Front Burner” weekly email report is my best writing and analysis, I think, because I get to look ahead at the marketplace and do some market price forecasting. Plus, I’ll throw in an educational feature to move you up the ladder of trading/investing success. And it’s free! Email me at jim@jimwyckoff.com, and I’ll add your email address to my Front Burner list.)
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only and is not a solicitation to make any exchange in commodities, securities, or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/or damages arising from the use of this publication.
